What extra payments do
Every extra dollar you send toward principal lowers your balance right away, so less interest builds up after that. Your monthly payment doesn't change, but the loan ends sooner.
Hypothetical example: on a $300,000 balance with 25 years left at 7.25%, paying $200 more each month pays the loan off about 5 years sooner and saves about $80,600 in interest. APR may differ; example only. Rates change daily.
What a refinance does
A refinance replaces your loan with a new one, ideally at a lower rate. A lower rate reduces the interest on your entire balance, not just the extra dollars you send. If you also choose a shorter term, you lock in a faster payoff, but the higher payment is required every month.
A side-by-side example
Hypothetical example: you owe $300,000 at 7.25% with 25 years left. Adding $200 a month would pay the loan off about 5 years early. Refinancing to 6.5% for 25 years would lower your required payment by about $143 a month. You could keep that $143 or send it to principal. APR may differ; example only. Rates change daily.
Example details: $300,000 25-year fixed at 7.250% (7.284% APR): 300 monthly payments of $2,168.42; $300,000 25-year fixed at 6.500% (6.529% APR): 300 monthly payments of $2,025.62. Principal and interest only; taxes and insurance not included, so the actual payment will be higher. Unless noted, APR assumes ZERO Closing Costs, no discount points and 15 days of prepaid interest. Hypothetical example prepared November 4, 2026, not a current CapCenter rate offer; subject to credit approval.
How to choose
- If today's rates are well below yours, a refinance usually saves more per dollar.
- If your rate is already low, extra payments may be the better use of spare cash.
- If your income varies, extra payments let you adjust month to month.
- If you'd rather have a lower required payment, a refinance can give you breathing room.
- If you're far into your loan, compare total interest before restarting a long term.
Doing both
You don't have to pick one. Refinance to a lower rate, then keep paying the same amount you pay today. The difference goes to principal, so you get the lower rate and pay off sooner. If money gets tight, you can drop back to the lower required payment.
What about costs?
Extra payments cost nothing beyond the money itself. A refinance can come with closing costs that take time to earn back. With CapCenter's ZERO Closing Costs, CapCenter pays for or waives the closing costs typically required to process the loan (restrictions apply). You still fund prepaid interest and escrow.